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Belgrade Airport concession decision delayed

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The Serbian government has, for a second time, delayed its decision to grant a 25-year concession for the financing, development through construction and reconstruction, maintenance and management of infrastructure of Belgrade Nikola Tesla Airport. The Public Body overseeing the process announced this evening, "The extension of the deadlines for the Public Body's decision on the selected best bid is necessary for the purpose of comprehensive analysis of additional information and documentation received from bidders at the request of the Public Body, with the purpose of expert evaluation of the bids in accordance with terms and criteria defined in advance in the Instructions for Bidders for Phase 2 of the Procedure and for the purpose of protection of public interest and equal and fair treatment of all bidders".

Three consortia and one stand-alone company have submitted binding bids. Originally, the decision on the winning offer was to be made on December 25, but was moved to December 29 due to the Christmas holidays in the majority of countries taking part in the process. The decision is now due on January 5, 2018, unless it is prolonged again. The concession process commenced on February 10, with 27 companies expressing initial interest. Under the terms of the concession, the individual bidder or consortium cannot hold more than 20% of the share capital or voting rights of an airport with more than one million passengers located within a 450 kilometre radius from Belgrade. As a result, this immediately disqualified Aéroports de Paris, the Marguerite Fund, Bouygues Bâtiment International, TAV Airports, Limak and Fraport.

Commenting on the concession process earlier this week, the Serbian President, Aleksandar Vučić, said, "The airport is being given up for concession for a period of 25 years. In addition to an up-front payment of at least 450 million euros, we expect investments to amount to 700 to 800 million euros, as well as an annual tax of some five to six million euros". He added, "Passenger numbers at the airport have increased 51% since 2012 as result of Air Serbia and its strategic partner". The government expects to wrap up talks with the future concessionaire by the end of March. The future operator is set to take over the airport by August 1 at the latest.

BIDDERS

Vinci Airports - The French construction and concession company recorded 38.1 billion euros in revenue in 2016 and took part in 270.000 infrastructure projects worldwide. It holds concession contracts in a number of airports including Chambéry, Poitiers-Biard, Lyon-Bron, Nantes Atlantique, Rennes and Toulon in France, Phnom Penh in Cambodia, Santiago de Chile, Kansai, the majority of Portugal's commercial airports, including Lisbon, as well as international airports in the Dominican Republic, including Santo Domingo. It signed a Memorandum of Understanding with Belgrade Airport for the development of joint projects back in 2015.

Consortium Meridiam Eastern Europe Investments, Zurich Airport International and Eiffage - The Franco-Swiss consortium is being headed by Zurich Airport (Flughafen Zürich AG), which is engaged in six airports worldwide. In addition to two Brazilian airports in Belo Horizonte and Florianopolis, it runs a further four airports in Latin America. The Swiss company said in a statement, "Our two partners, Meridiam and Eiffage, have committed themselves to the long-term success of the airport of the Serbian capital, bringing important relevant experiences with infrastructure projects in the Central and Eastern Europe region". Zurich Airport was the finalist in Zagreb Airport's concession process.

Consortium Incheon International Airport Corporation, IC Ictas Altyp Iyitirimlari VE Isletme and VTB Capital Infrastructure Holdings Limited - Seoul's Incheon International Airport Corporation, which leads the consortium, runs South Korea's busiest airport which last year handled 57.7 million passengers and generated revenue of one billion euros. Its international expansion began in 2009 when it signed a consulting project to support the operation of Iraq’s new Erbil International Airport. It has since concluded 25 overseas contracts for projects in twelve countries. It was selected to provide operations consulting services for Istanbul's new airport, which is currently under construction and expected to be the world’s largest. The Corporation also boasts projects in Indonesia, India, Russia, the Philippines, Uzbekistan, Bangladesh, Nepal, Cambodia, the Dominican Republic and Paraguay. It unsuccessfully bid for a concession of Zagreb Airport in 2011 with consortium partner IC Ictas Altyp.

Consortium GMR Infrastructure Limited and Terna S.A. (Tourist Technical and Maritime Society Anonymous) - The GMR Group is one of the fastest growing infrastructure enterprises in India. It currently owns and operates Delhi International Airport and Hyderabad International Airport. The Group is also developing Goa’s greenfield airport. Furthermore, GMR Infrastructure is operating and developing Mactan Cebu International Airport - the second largest airport in the Philippines. Jointly with its Greek partner Terna S.A., the duo have won a concession to develop, operate and manage the new international airport in Heraklion on the Greek island of Crete.

No it was 27 companies who expressed interest. You obviously don't know much how international tenders of this kind work. BTW there were only 2 binding bids for Zagreb Airport. Aeroports de Paris and Zuirch Airport.

It will be interesting to see what the future concessionaire will do with BEG. Will they immediately start work on expanding capacity or will their primary goal be to grow passenger number and airline customers. I'm also interested to see how this could impact Air Serbia.

Whoever wins I hope they work on attracting more legacy carriers. As for Air Serbia, they already pay full fees at BEG so I don't see how it can impact them except that they could get more competition because the airport management may try harder to attract new airlines.

@anon 1:54pm... i agree all of this talk that it's selling the assets makes me laugh. It's basically the government getting money for something that is still theirs. It's up to the concessionaire to earn money in the process.

VINCI and South Koreans are the favourites. The concession price won't all go to the government. They own 83,14% of shares in the airport so they will get that amount of money from the toal price paid. The rest will go to minority shareholders.

According to the concession agreement the concessionaire will have to invest 700 million EUR in the airport in the next 25 years. Passenger number targets for BEG as outlined by concession agreement are projected at 8 million by 2020 and 17 million by 2042.

Let's make a basic math. Considering that the concession agreement and the traffic projection mentioned here are prepared by Serbian government, we can anticipate the expectation of 450M Euro has been calculated based on the mentioned projection. On the other hand, consortia will make their own calculations based on their own projections, which -most probably- will be more realistic than 8M pax in 2020. Assuming 8% growth every year until 2020 (to reach 7M) and and slightly lower (4.3% vs. 4.8% projected) until the end of period (15M), we can expect the revenue accrue nearly 13-15% lower than the government's expectation. So, even in the best scenario (Etihad remains in JU, vision with pink glasses realize etc.), the best offer would be 15% less than expected. And one most be blind not to see the risks involved there, so I assume the best offer would be at least 20% less than the projected value.

What eerie silence? Everyone has published this morning that a decision will be made today. Yesterday there were articles in a few newspapers about what the expectations are. So where is the eerie silence exactly? The fact that they haven't pre-announced the winner? Had they done that you would be the first to bark that the tender is fixed.

The fact that there has been no leaks, little speculation in the media, and few experts claiming to know who won because of so and so, is concerning in itself. Why, because it is 'un-Serbian' like. Joking aside, dare I say thing seem to be going relatively smoothly ... for now.

Pretty much every major announcement comes early in the morning. Not to mention they have not even reported when and where will the press conference be held and literally zero articles about it in the media. I say they will postpone it for next week.

1. They can't postpone it. Under law when postponing they have to publish that in the Official Gazzete of the Republic of Serbia 24 hours before the deadline passes (as they have done every single time). The deafline passed at modnight. You can find the official gazzete from yesterday online. No announcement of postponing the decision.2. They are not at all requred to hold a press conference and there hasn't been an example of one held in the region when a preliminary decision is made - only when they sign the concession contract which is in March.3. There are numerous articles in the press. Over 20 at least. I will give you links just for a fewhttps://www.kamatica.com/vest/danas-istice-rok-za-izbor-koncesionara-za-aerodroma/55569

So what is not a Balkan way of doing business, postponing an announcement that you already date-set because it's Christmas in a minority of countries involved (cause you didn't know when it will be when setting the date) and then pronouncing a strategic decision on Friday at 7PM after the stock-exchange has closed?

None of my points are false and especially the main point. Yeah, 25 December is 'public holiday' in India observed by how many? As many as the Kuban-Bayram in Serbia. So you shouldn't have started making a fool out of yourself in the first place and instead focussed on the main argument which is that their behaviour is murky and unprofessional. Period.

You are the one making a fool of yourself. 25th december in India is a public holiday and a non working day in the entire country. Who personally observes it is completely unimportant because it is a non working day. So yes your claim that december 25 was a holiday in a minority of countries involved when in fact it was in nearly every country involved was false. Take a chill pill.

I wish they get this money, however it seems a lot. After all, they will expect to make some return on investment. '450 million euros, we expect investments to amount to 700 to 800 million euros, as well as an annual tax of some five to six million euros'

You are sharing old news from almost 10 days ago. Only relevant decision on this is made by public body. They said they will make a decision on 29th december.http://www.beg.aero/admin_images/meni_doc/odluka-o-produzenju-roka-1_4591_c814d1ba0d589bc.pdf

oh and I found that they did report on what the minister saidhttp://www.exyuaviation.com/2017/12/belgrade-airport-concession-decision-due.html

I think that it has something to do with the situation of Air Serbia. There are very strong rumours that Ethiad is withdrawing from ASL in early January. This would heavily inflict the whole process and the net worth of the airport......

I only see BEG and DBV as the true leaders in the ex Yu region. I am saying this because both airports have worked so hard to achieve all those remarkable results.Good luck BEG and also to DBV that I am confident will soon be on the top of the list.

So the Russians and Chinese are out! I think the winner will be the français as they did with ZAG. New terminal in 3 years, expensive airport and BEG will continue competing with ZAG as the shiniest airport in the Balkans. If only there were more LCC.

My guess is that Serbian government is simply asking for way too much. Just my humble but I think it's either a 4 to 5 hundred million payment up front with Serbia having some future financial responsibilities like paying all or part of airport development work or 4 to 5 hundred million total invested into the airport by the new operator with a yearly dividend payed to Serbia with no or a much smaller upfront payment.

The negotiations must be pretty intense.

Apart from Zagreb, do we have any other similar comparison where we could gauge what a reasonable outcome would look like?

Is it true that ZAG terminal was scaled back from the agreed size ? Gov't can ask whatever they want. Similar situation to that of Telekom, when Dinkic ( if I recall correctly) floated some crazy figures in the press. in the end it wasn't sold.

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